INSIGHT: Corporate Investigations in the Age of Lagos: Maximizing Restitution Without Losing Cooperation Credit—Part II

In Part I of our series on structuring corporate investigations,we explored Lagos v. United States, a May 2018 Supreme Court decision. In that decision, the Supreme Court unanimously ruled that Section 3663A)(b)(4) of the Mandatory Victims Restitution Actof 1996 (the ‘‘MVRA’’), 18 U.S.C. § 3663A, did not requirea defendant to reimburse a corporation for the costs it expended to investigate violations for which the defendant was later convicted. Moreover, the Supreme Court held that companies are not entitled to restitution under Section 3663A(b)(4) of the costs of corporate investigations they conduct of their own volition. That, and other broad language in Lagos, has resulted in courts denying companies millions of dollars in restitution since May 2018. Currently, in the Eastern District of New York, up to $145 million in restitution hangs in the balance, with Judge Pamela Chen having suggested she will apply Lagos to deny restitution under the MVRA to FIFA and other soccer associations. As noted in our previous article, on October 4, 2018, Judge Chen stated during a hearing: ‘‘I can tell you generally speaking that, after Lagos, I think there’s not much support for internal investigations undertaken by the victims unless, and even this I think is still questionable, unless invited or requested to do so by the government[.]’’